Section 1 [Energy Forward Pricing Mechanisms] expands the optional use of forward pricing mechanisms for energy. Under current law, a forward pricing mechanism is a contract for purchase of a specified quantity of energy at a future date at a set price, and state agencies are authorized to enter into these contracts for up to 90 percent of their estimated energy use for a given period of time. This bill expands the permissive authority entering into futures contracts for energy by:
(1) allowing the use of this mechanism for options for contracts, as well as for contracts;
(2) adding to the list of entities authorized to enter into forward pricing mechanism contracts and options for contracts; and
(3) increasing the amount of energy that may be subject to a forward pricing mechanism from 90 percent to 100 percent of estimated energy use for a given period.
More specifically, the following entities are added to the list of those authorized to enter into forward pricing mechanisms: Minnesota State Colleges and Universities, the University of Minnesota, a statutory or home rule charter city, a county, a town, a school district, a regional agency, or another political subdivision.
Section 1 adds a requirement for an oversight process before a government agency can exercise their authority to use a forward pricing mechanism.
Section 2 repeals a section that authorized Hennepin County to enter into forward pricing mechanisms for energy contracts. The repealed section is duplicative, in light of the change under section 1 authorizing all counties to use future pricing mechanisms for energy.